Green jobs on the rise – world climate business revenue $2 trillion by 2020

The worldwide New Green Deal is becoming a reality. Global revenues from all climate-related businesses are now worth a stunning $530 billion. It could even exceed $2 trillion by 2020. In Europe 3.4 million jobs are already directly related to the low carbon economy, compared to 2.8 million jobs in polluting industries. Climate change has become a real business driver and more and more companies are interested in becoming green.

The green world economy

The famous 2006 Stern Review on the economics of climate change forecasted climate-related revenues to climb to $500 billion by 2050.

However, HSBC Global research estimates that we have already surpassed that. Global climate-related revenues now already top a stunning $530 billion and are likely to exceed $2 trillion by 2020.

The proliferation of green deals all over the world caused a rise of 75 percent in this market in the last year alone. This contrasts starkly with a slowdown of the world economy in 2009 to less than 1% GDP growth.

The climate sector has not only surpassed Stern predictions. According to the HSBC report it has even surpassed the size of the global aerospace or defense industry.

Countries such as the United States, Japan, France, Germany and Spain profit the most from this new green growth. They account for 76 percent of global climate revenues.

HSBC differentiates between four main categories in the green economy. Of these four, investments in energy efficiency present the largest opportunity, with a 30 percent return on investment. Carbon/climate finance follows closely with investment returns at 24 percent. The two other climate investment categories are low-carbon energy production and the control of water, waste and pollution.

Green jobs

Behind every company there are workers. Behind every profit there is a wage. The green economy is no different and is already boosting employment.

The WWF report “Low carbon jobs for Europe” shows that at least 3.4 million European jobs are directly related to renewable energy, sustainable transport and energy efficient goods and services. This compares with 2.8 million jobs in polluting industries, such as mining, electricity, gas, cement, and iron and steel.

Split up in different sectors this means 400,000 people are employed in renewable energy activities, some 2.1 million in efficient transport, and over 900,000 in energy efficiency goods and services.

These green jobs require a very broad range in skills. Low to medium skilled workers are needed for manufacturing, installing and the maintenance of wind turbines and solar panels. High skilled workers are needed to research and develop the innovative green solutions for tomorrow.

Green business model

In order for businesses to continue green investments, the business model needs to change. Paying attention to the impact of economic activity on the planet needs to become a source of profit.

A recent study suggests this is already the case. Sustainability is now seen as a major business driver with 52 percent of companies (65 percent of large companies) designing and offering sustainable products or services, about 72 percent of American companies (85 percent of large) reducing costs through improved materials efficiency, and 58 percent (60 percent of large) manufacturing or sourcing domestically/locally. In addition, 59 percent of large companies offer energy-efficient products and another 59 percent provide customers with more information about social and environmental impacts of their products and services.

Governments need to continue their support for the green economy

However, to support these changes in business model and the profits in the green business, governments need to sustain their support for the green economy. Much still needs to be done after the initial money boost through the green deals worldwide.

Buildings are still using too much energy while it is economically viable to renovate them to become more energy efficient. The energy production needs to change to renewables, while a smarter electrical power grid is needed to support this change. Transport is still far too carbon-fuel dependant while investments are required to make carbon-friendly alternatives such as trains and boats more attractive. Support in many other sectors is needed to supply the green economy with the adequate infrastructure and provide incentives to businesses wishing to go green.

Governments have often lagged in implementing climate change policy, sometimes even in spite of an obvious direct positive impact. Belgium for example has been one of the three EU countries who did not oblige car fuel to be mixed with biofuel. As a result 100s of jobs in the Belgian biofuel sector were lost to the gain of the oil sector. Other countries have lagged in renovating their building stock to use less energy, in spite of the fact they would not have to pay one Eurocent for the works.

In my next post I will therefore focus on the recovery packages of governments around the world to combat the economic crisis. Was all the green rhetoric reflected in actual spending of all that public money? And how well did Europe score?

Originally published on the Th!nk About It blogging competition (link)